CoinPhlip

Bitcoin Dominance reaching a crucial level - What happens next?

CRYPTOCAP:BTC.D   Market Cap BTC Dominance, % (CALCULATED BY TRADINGVIEW)
With this short analysis I would like to point your attention on the chart for Bitcoin's dominance and an outlook of what can happen next.

Bitcoin's dominance entered an important zone of support and resistance . Many factors could try to block the rise for Bitcoin in terms of dominating the crypto market. An outbreak out of this are could mean an explosive development in price action for crypto, especially BTC .

First, there is the zone of support/resistance (green box). We haven't seen BTC's dominance above 72% since July 2017. In the second half of 2017 the ICO boom set in and many Altcoins rallied to unprecedented highs. Although Bitcoin rallied till mid of December of the same year, dominance couldn't get above that zone since then.

Second, the 200 week moving average is closing in from above. Unfortunately we don't have a lot of data and it is would be the first occurrence ever. We will see what that means for dominance, but usually the 200MA acts as another important (dynamic) resistance.

Third, the stochastic indicator for BTC's dominance is overbought (above 80) the sixth week in a row, if look you back in time we haven't seen stoch being in overbought territory for more than eight weeks yet (data reaching back to 2015).

In summary, I guess we are having two very interesting weeks ahead of us. Following settings are possible in my opinion:
  • Bitcoin's rise in price continues and Alts keep on bleeding out, a really bad scenario for any Altcoin project. In consquence we also would see BTC dominance increasing higher. Probably reaching new a ATH for BTC .
  • Another scenario might be a further retracement for Bitcoin (rejection on downsloping trendline on BTC chart) and Altcoins eventually finding a bottom and turning north (finally). It would be similar to September/October 2017, where Altcoins rallied when BTC took a short breath before reaching a new ATH by the end of 2017.
  • A really interesting, although unlikely, setting would be seeing Bitcoin and Altcoins rising together . This would mean a great inflow of fresh capital into the overall crypto market (escaping traditional markets, as we are having difficult times (trade war, hight debt) currently). This could result in absolute exuberance in crypto markets with insanely high prices. So far, we have only seen a limited inflow of fresh capital, mostly into Bitcoin . This could stabilize Bitcoin's dominance or lower it if Altcoins outperform, by reaching new highs for Bitcoin and higher price for several Altcoins projects.
  • And last, we could also go to zero. You never know. Markets are crazy.
These are just some ideas derive from BTC's dominance in the market and the development over time. What do you think?
Comment: BTC.D jumped over the 70% mark and is closing in on the 200 MA.

BTC depending on which exchange you are looking is either holding the trend line coming down from recent highs in June or already broke. As those are differing currently, I chose to follow the futures chart of the CME, as volume and price action can be considered legit. Downside they are not trading 24/7 and there is a risk for gaps. As long as the trendline hold, I don't see BTC.D breaking out the long term resistance.
If we start to price action to the upside, I can imagine we take the resistance zone. Followed by a decent run to the north, as there is not much holding dominance back.
Comment:
Comment: Short Update:
For the moment it looks like BTC.D topped and fails on the 200-week MA. I am wondering if we can see a close below 70% by the end of the week. Some Alts have signs of live already #LINK / #BCH (both worked as hedge to BTC lately).

For the moment, I would to the option that we reached the bottom for many Alts and a little rally might be ahead of us. I will start paying more attention of Altcoins now and looking for some confirmation or patterns to be developed. As well as for the closing of the weekly on Sunday.

Wait for confirmation! You never know what BTC has up one's sleeve.

Comments

We are going to go to the zero or minus if you use a credit funds.
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CoinPhlip biofieldcomua
@biofieldcomua, thanks for your comment! Could you go a little more into detail what you mean?
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